Florida Estate Planning: Special Needs Trusts  Defined

Special needs trusts can be one of the most important tools in a family’s estate plan; yet, they’re not for everyone. To explain what they are, who might need them and how they differ from traditional trusts, we asked a Florida attorney whose practice focuses in this area of the law.

Florida Attorney Sarah Peart

Sarah E. Peart, an attorney from Tampa Florida whose practice focuses mainly in the areas of wills, trusts, estate planning and real estate law, says that special needs trusts can be an important estate planning tool. However, they are unique tools that are often misunderstood. She provided us with the basics in a recent interview:

What is a special needs trust? A special needs trust is a trust for the benefit of a disabled individual under the age of 65 who qualifies as disabled under federal law or a relevant state statute which provides for the repayment to the state for medical assistance, or Medicaid benefits, provided upon the death of the disabled individual. Medicare and Social Security kick in after the age of 65 and the federal requirement only allows the special needs trust to be exempt up to age 65.

How does a special needs trust differ from a revocable or irrevocable trust? A special needs trust is a very unique trust for which an individual must qualify. There are several clauses that must be included that would never be found in any standard trust.

One major difference is that the beneficiary cannot be either the grantor or the trustee. In addition, there are only a few people who can actually qualify as the grantor of a special needs trust. Another difference is that a special needs trust must specifically reference the federal or state statute under which it was created to be a valid, exempt trust. It must also provide for the payback of medical assistance benefits provided upon the death of the disabled to the state.

Who should have a special needs trust? Any qualified disabled individual under the age of 65 should have a special needs trust if it’s at all possible. Special needs trusts are used for a disabled individual’s supplemental needs – meaning the needs that are not paid for by the state medical assistance programs or any other public benefits.

Defining disability

Disability is defined under federal law, specifically under the Social Security Act. Many types of disabilities qualify for exempt special needs trusts such as Cerebral Palsy or Down’s syndrome, according to Peart. She explained, “Generally, an individual will be considered disabled if he or she is unable to engage in what’s called ‘substantial or gainful activity’ such as working due to the disability and if that individual’s disability is expected to either result in death or last for at least 12 months. The standard for disability is actually defined differently for children under 18, but it’s very similar.”

If you have a disabled loved one and believe a special needs trust might be right for your situation, contact an experienced Florida trusts attorney to evaluate your options. Consultations are free, without obligation and are strictly confidential.